HealthSpot, the poster child for telemedicine kiosks has suddenly and abruptly shut down. Its fall is rather poignant considering its much touted partnerships with big guns such as RiteAid, Kaiser Permanente, and Cleveland Clinic. HealthSpot brought in a hefty $43.8 million in venture capital and debt financing between July 2011 and January 2015 with its vision of establish self-serve telemedicine kiosks all over the US. It was backed by investors such as Xerox. There’s been no sound from HealthSpot or its investors so far.
Where Did HealthSpot Go Wrong?
Although everyone is wondering why Healthspot failed, I don’t think it’s a signal for the end of telemedicine. American Well CEO, Roy Schoenberg has pointed out that American Well also owns telemedicine kiosks, which are doing quite well. He surmises that HealthSpot’s failure was due to its work model. HealthSpot kiosks only allowed for scheduled visits between patients and doctors and did not provide the convenience of true on-demand health. I completely agree with Roy, and would go so far as to say that it is the number one reason why HealthSpot failed.
Doing Telemedicine on the Cheap
The second reason it failed is that it was spending too much. For one, it picked Vidyo for telemedicine. Vidyo is not only expensive, but it requires infrastructure that forced HealthSpot to have to maintain farms of servers and IT staff to keep it going. Secondly, the overall HealthSpot kiosk, while beautiful, was overkill for what is actually needed. Based on data from VSee kiosk customers, a typical HealthSpot location may expect about 10 patients a day even after it becomes fully on-demand (this is on top of scheduled appointments). At 10 patients a day, there’s simply not enough cash inflow to justify the expense of a fully equipped HealthSpot kiosk. In contrast, VSee customers use a do-it-yourself approach to setting up a kiosk, where they can create a HealthSpot-like experience for a small fraction of the cost. (You can check out my Urgent Care Telemedicine Tips slideshow for ideas on how to do this.)
The third reason HealthSpot failed is that its target market is too small. Specifically, it could not compete with urgent care centers. HealthSpot occupies a narrow market segment of people who have minor illnesses but still have to go somewhere to get medical attention. However, since it does not provide as wide a range of services as an urgent care center, the actual reasons to go there is rather limited.
In spite of HealthSpot’s inauspicious demise, I’m still optimistic about the future of telemedicine and believe that we are on our way to making it a part of our everyday life and healthcare system. Here’s to VSee, MDLIVE, American Well, Teladoc, Doctor-on-Demand and the many others out there making telemedicine work in 2016!